Written by Jay Turo on Monday, December 14, 2009
Showing once again where our modern media priorities are, shoved off the front page last week by more lurid Tiger Woods talk, was the very under-reported but potentially game-changing proposal that President Obama made last week regarding eliminating all capital gains taxes on startup and small business investments.
There are so my ways that this is good for small business, for America, and for private company investing. Let me note three:
1. Simple Fairness. It has been a very tough couple of years for startups and small businesses. Unlike automakers and big banks, the nation's entrepreneurs were left to completely fend for themselves through the recent economic tsunami.
And, as befits a class of people that can only be described as modern-day action heroes, given their massive and unsung contributions to the American way of life, the entrepreneurs among us have handled their adversities as they always do - with stoicism, with grace, and with the simple coda that nothing is immutable to hard work.
But it is beyond time that someone lend them a hand. If, miracle of miracle, Congress follows the President's lead and makes this proposal law (and given how lower capital gains has been a Republican mantra since I was in high school, the probability is high that it will), it will unleash a huge investment bull market across the entrepreneurial landscape.
And let's not forget how overdue this is - for the 1st time in history this last decade will go down as the only one where more money was invested INTO venture capital than was earned out. While early-stage private equity investing did much better in the decade than VC's, it has still been a very rough go of it.
The hope here is that this tax break will be a catalyst for capital move from do-nothing and know-nothing investments like gold and into productive ones like technology startups and small businesses.
2. Startup and Small Business Tax Breaks Spur Innovation. The proposed capital gains tax break, when coupled with the proposed tax credits for small business hiring and investment, will provide a much-needed boost to entrepreneurial risk-taking and innovation.
Remember, this information age of ours is a story of "guys in garages." Gates and Allen, Jobs and Wozniak, Page and Brin.
Similarly, the big ideas of the coming "Energy Age" - in battery technology, in cold fusion, in greenhouse gas reversal, will NOT come from the federal government or big business.
Why? Because very simply the most creative people do NOT want to work within any kind of bureaucracy. Rather, they will come from the yet to-be-founded startup, that fluid and flexible small business about to break-out.
Anything that makes it easier for these innovators to have cheaper access to capital - which a waiver of the tax on capital gains effects - is a HUGE positive.
3. Let's Get the Best and Brightest to be More Entrepreneurial. Finally and tied to this point, the central economic and investment issue of our age is not inflation, it is not big bank bailouts, it is not health care reform, it is not Democrat versus Republican and it is not liberal versus conservative.
No, it is what can and needs to be done to spur the "best and brightest" among us to be more entrepreneurial and more successful when they are.
Why? Because entrepreneurs create the innovations that create the jobs that create the wealth that create our whole, cherished American way of life.
So we need everyone in positions of influence in our society - government, media, education, entertainment - to stand-up for the entrepreneurs.
The proposed capital gains tax break in this context is as important in what it signals as its direct stimulus effect.
And for you investors out there, the best thing is that if YOU do the best thing for the economy and the country and invest in entrepreneurs, well guess what?
If you do it right, you will make far more on your money that you could ever imagine.
This is called doing well while doing good. And it is highly recommended.
I look forward to your attendance and feedback.
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Written by Dave Lavinsky on Friday, December 11, 2009
As you know, last month we opened the doors to 100 new Growthink University members.
Written by Dave Lavinsky on Tuesday, December 8, 2009
If you're looking for funding to start or grow your business, then you should listen to this.
This MP3 is a preview of my brand-new, in-depth capital raising course, "The Secrets to Raising Capital."
If you want to learn how to successfully raise capital from more than 40 sources of funding, then click here to learn more about the full 14-part course.
Written by Dave Lavinsky on Tuesday, December 8, 2009
When I was younger, I had four full-time jobs before I started my first business.
Looking back, in none of these jobs did my managers ask for my ideas or suggestions. Nope - my business creativity and ideas simply didn't matter. Even though I had a lot of them. And many were ideas that could have really helped those companies.
So what did I do?
I left. I left those jobs until I found one where all of my ideas would receive the proper attention - running my own company.
But now that I'm running my company, I can't make the same mistake that my past employers made. That is, I must challenge my employees and encourage their ideas and suggestions.
Why? Well for numerous critical reasons according to award-winning author and professor Dr. Alan Robinson who I recently interviewed.
Specifically, according to Dr. Robinson's vast research, 85% of new ideas at companies come from front-line employees. Yes, the employees that are interfacing with customers and vendors, and employees that are manufacturing your products or cleaning your facilities come up with the vast majority of your best ideas.
Which is very interesting and dispels the myth that most great ideas are generated by CEOs and top managers. This makes sense though. Entrepreneurs and founders come up with ideas to form companies. But then they must eventually transform into managers of their organizations. In doing so, they move farther away from the front-line operations, making it harder for them to innovate themselves.
Which is why great entrepreneurs make innovation and business creativity a key part of their organizations.
According to Dr. Robinson, the first key to effectively integrating business creativity, idea generation, and innovation into organizations is "alignment." Alignment simply means that everyone in the organization knows the goals of the organization, and what goals new ideas should aim to solve. In an example of poor alignment, he mentioned the angry CEO who found a note in the suggestion box to "offer different flavors of peanut butter in the cafeteria." Clearly, this CEO, and not the employee, is at fault for not aligning his organization around its key objectives.
The second key to effective idea generation is to establish systems or processes. These systems do not have to be formal or costly. For example, giving employees 30 minutes/week to discuss new ideas is enough for them to 1) know that they should always be thinking of new ideas, 2) that their ideas are valued, and 3) that they have a formal opportunity to discuss their ideas.
Implementing idea generation programs not only results in great new ideas that allow companies to outperform competitors. But they result in dramatically higher employee satisfaction and morale.
In fact, one of the top reasons employees give for quitting a job is that management didn't take their ideas seriously. When employees are asked to submit ideas, given time and/or incentives to submit ideas, and see their ideas implemented, they become much more committed to their organizations and perform better.
So, as you grow your organization, be sure to implement formal processes for business creativity and idea generation. Fortunately these processes are easy to implement, and will have multiple benefits to your bottom line.
In the interview, Dr. Robinson gave some great advice for implementing formal processes for idea generation in your company. He also provided great ideas for assessing new ideas, making sure new ideas don't interrupt the process of implementing existing plans, and dealing with bad ideas, among many other key topics.
To hear a short clip of the interview, click the blue triangle on the player below:
Growthink University members can download the full interview here: http://www.growthinkuniversity.com/members/379.cfm
Written by Dave Lavinsky on Monday, December 7, 2009
Not long ago, the sky seemed like it was falling. The Dow dropped to an annual low of 6,547 and the media was forecasting more and more gloom. And those familiar with the venture world were saying that funding was near impossible.
Written by Dave Lavinsky on Monday, December 7, 2009
Imagine for a moment that you were really great at something, but never acted on it.
How would your life, and the lives of others been impacted?
Let's take Michael Jordan. What would have happened if he never picked up a basketball? What would he be doing today? (I would bet he wouldn't be retired.) How much wealth would he and his family have lost out on?
Interestingly, a lot of people think that opportunities are lost or squandered when people are young. This is clearly not always the case.
Consider Grandma Moses. Grandma Moses loved painting as a child. But, she and her family didn't consider painting to be a real, paying job, so she spent decades earning a living doing embroidery work.
But, this all changed when Grandma Moses reached her seventies. Her arthritis worsened and she was unable to continue doing embroidery. So, Grandma Moses finally set out to do what she loved - painting.
She went to an Arts & Crafts store, purchased some supplies, and went to work. Within a few years, Grandma Moses would be creating two paintings a week. And each of these paintings would earn her more than she earned in a lifetime doing embroidery. In fact, in her eighties and nineties, she made paintings that would earn her over $300,000 each.
Now let's look at the impact of Grandma Moses' decision to start painting. Financially, she made millions. Money that would help her grandchildren get better educations, get better health coverage and live better lives. She also generated thousands in tax dollars which, among other things, would help fund essential projects. She generated jobs; she must have had assistants who helped her purchase supplies, arrange art showings, and handle her travel and financial affairs.
And then there are the millions of people that Grandma Moses touched by simply allowing them to look at her beautiful paintings.
Yes, even at an elderly age, Grandma Moses made an impact on millions of people.
But what about you and I?
The fact is that each of us have talents. And when we choose to reveal them, and nurture them, and fight to use them - essentially, when we choose to become true entrepreneurs - we positively impact many lives.
Because of this fact, I was not surprised by the Kauffman Foundation's recent study entitled "Where Will The Jobs Come From?" The study reveals clear evidence that "new and young companies and the entrepreneurs that create them are the engines of job creation and eventual economic recovery."
In fact, since 1977, net job creation in the American economy would have been negative in all but a handful of years if not for startups and young companies (defined as < 5 years of age). And even in good times, like in 2007, when 12 million new jobs were added, two-thirds of the new jobs were created by startups.
So, if you are debating starting a business, now's the time to do it. If you have an existing business and are thinking about new growth initiatives, now is the time to launch them.
Yes, now is the time. It's not just about your personal satisfaction. It's about the tens, hundreds, thousands and even millions of lives that you can positively influence with your gift of entrepreneurship. It's time to really put that gift to use.
Written by Jay Turo on Monday, December 7, 2009
As many of you I am sure are aware, there has been a major gold bull run since the start of the year. While pulling back slightly in the last few days, the price of an ounce of gold touched a record $1,227.50 on Thursday, December 3rd.
Most of the rally has been driven by widespread inflation fears, which in turn are driven by the massive and unprecedented deficits that most of the major industrial governments (save China, of course) seem committed to running for as far as the eye can see.
Gold - say the wise men - is the ideal inflation hedge, which of course is another way of saying that it is the ideal hedge against governments acting badly and confiscating the well-earned wealth of its productive citizens.
Now I would never begrudge anyone that likes betting against government as an investment strategy, but by golly if there ever was an investment that just outright appeals to the uninformed (and those who prey on them), it is gold.
Let's take a step back here, folks, and think a bit about the word "investing," defined by Webster's as "the active redirection of resources/assets to creating benefits in the future."
Now can someone please explain to me how an asset that doesn't yield or produce ANYTHING, and costs money to store, could possibly be considered an investment?
The answer, quite simply, is that gold isn't an investment. Gold, as jewelry or decoration, or accoutrement, is beautiful. Gold as investment is a cult.
A cult of negativity and pessimism, to be more precise. And one in which it would be funny if it is wasn't so sad how many of the older generation in this great country of ours are caught up.
Spend a little time amongst the retired set talking about both investing and the future of America and the amount of fear, negativity, and of an all-consuming mindset of concern for one's own hide and to heck with everyone else falls somewhere between depressing and appalling.
A particularly galling trick of the gold huckster industry (coming to a talk radio or billboard ad near you) is to first promote with great fury their "sky is falling" shtick, then suggest that the only solution is not to just buy gold (that would be bad enough), but to buy gold COINS versus the bullion itself (or far more efficiently, a gold ETF like State Street's Gold Spider (NYSE: GLD)).
What they don't tell you is that they mark these coins up as much as 30% - making almost as much money for themselves as the Pirates of old. And oh yes, if gold bullion and coins were regulated investment assets as they should be, they would call that amount of markup a crime.
How About Actually Investing?
Now let's look at the polar opposite of investing in gold - namely investing in the most productive, most effective, most wealth-building sector of our economy.
I am talking of course about investing in the modern-day action heroes that are the world's entrepreneurs. The men and women who right now are starting and building the Googles, the LinkedIns, the Facebooks, the Twitters, the Apples, the Microsofts, the Amazons, of the next 20 years.
They are passionately at work at the new and young companies where the ideas are freshest, where the work ethic is most profound, and where the innovation breakthroughs are most world-changing.
And unlike investors in gold, who have gotten a negative long-term return since 1980 (on an inflation adjusted-basis, gold's $599/ounce price peak in 1981 price translates in today's $ to $1,417/ounce, investors in entrepreneurial and small companies have killed it - earning a whopping 21.4% annually during that same time frame.
So this holiday season, buy that special someone a gold necklace, or earrings, or bracelet, or gold-plated watch, for sure.
But if you want to give yourself a gift, hang up on the gold hucksters and instead find and back the entrepreneurs in your midst.
They will TRULY be the gift that keeps on giving.
Written by Dave Lavinsky on Wednesday, December 2, 2009
Many of you might recall that I interviewed Bambi Francisco, founder of Vator.tv, months ago.
If you’re not familiar, Vator.tv is an online community that allows entrepreneurs to showcase their ventures and communicate with customers, partners, and investors. I fully recommend that you check out Vator.tv.
But that’s actually NOT why I’m writing today…
Today I wanted to tell you about Vator’s upcoming “Splash” competition, which will showcase 10 promising startups, and the hottest companies in social gaming and iPhone app development. Plus, you can meet and network with elite venture capitalists.
Best of all, I’m excited to announce that I’ve secured you a 25% discount to this event.
Here are some more details:
On the evening of February 4th, 2010, ten seed- to early-stage companies (selected by their peers) will have the opportunity to pitch the Silicon Valley elite. These 10 companies will also have a high quality video of their presentation produced.
In addition, Mark Pincus, CEO of Zynga, will talk about how he built the leading social gaming company in a few years, and Jeff Smith, CEO of Smule, will talk about how he built some of the hottest iPhone apps.
Additionally, venture capitalists from Google Ventures, August Capital, Greycroft Partners and Norwest Venture Partners will also be present.
To submit an early stage company to pitch, click here:
If you’d like to attend the event, you can reserve your 25% discounted ticket or pitch table below by using discount code: Vatorgrowthink, here:
Note: This special 25% discount ends December 11th.
Written by Dave Lavinsky on Tuesday, December 1, 2009
Have you ever driven somewhere, gotten there, and forgot about the last minutes of the drive? You know that you were driving. But your mind must have been somewhere else, since you can't really remember the turns you made, the lights you stopped at, etc.
Growthink University members can download the full interview here: http://www.growthinkuniversity.com/members/378.cfm
Written by Jay Turo on Monday, November 30, 2009
A very, important study of U.S. Economic Census Data conducted by the Ewing Marion Kauffman Foundation, was published last week that statistically demonstrates who really creates jobs in the American economy.
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